Key takeaways
- The U.S.–Israel military operation against Iran is already translating into elevated tail risks for oil markets, with Brent prices breaching $100 per barrel (bbl).
- Gold prices could soar further in the near term, as could aluminum prices, especially as the Middle East is a major producer and exporter of the base metal.
- If Brent prices remain elevated through mid-year, global GDP growth for the first half of 2026 could be depressed by an annual rate of 0.6%, according to J.P. Morgan Global Research.
From events in Venezuela to the Russia-Ukraine conflict, geopolitical risks have roiled markets in 2026. Most recently, the U.S. and Israel carried out a joint military operation against Iran on February 28, which culminated in the death of Iran’s Supreme Leader Ali Khamenei and other senior officials. In response, Iran launched a series of retaliatory missile strikes against U.S bases across the Middle East, including in Jordan, the United Arab Emirates and Qatar.
Stocks retreated and oil prices soared after the conflict erupted, and more volatility could be in store for markets. “This event generates greater macroeconomic risk than recent military conflicts. Through its potential to disrupt global energy markets and supply chains, it looks likely to have material, lasting political and economic consequences at the regional level,” said Joseph Lupton, co-head of Economic Research at J.P. Morgan.
“Through its potential to disrupt global energy markets and supply chains, the conflict looks likely to have material, lasting political and economic consequences.”
Joseph Lupton
Co-head of Economic Research, J.P. Morgan
What are the repercussions for oil markets?
The conflict is already translating into elevated tail risks for energy markets, given the significance of the Iran-controlled Strait of Hormuz in global oil trade. Flows through the Strait account for 20% of global volumes, making it a key energy chokepoint.
On March 9, oil prices soared past $100 per barrel (bbl) for the first time since 2022, and could march even higher as supply pressures intensify — especially as commercial traffic through the Strait is at a standstill and Gulf storage facilities are almost at capacity. “The market is shifting from pricing pure geopolitical risk to grappling with tangible operational disruption, as refinery shutdowns and export constraints begin to impair crude processing and regional supply flows,” said Natasha Kaneva, head of Global Commodities Strategy at J.P. Morgan. “By March 15, as storage fills and bottlenecks persist, we project regional production shut-ins of close to 7 million barrels per day (mbd). By March 22, the shut-ins will likely reach 12 mbd if the Strait of Hormuz remains closed. A disruption at Kharg Island — a strategic terminal that handles roughly 90% of Iran’s crude exports — could lift total losses to around 16 mbd.”
“It will take time before we consider material changes to this year’s energy price outlook, but tail-risk concerns will likely persist until the conflict subsides,” Lupton added.
What’s the impact on gold and aluminum prices?
Following the attack on Iran, gold prices surged above $5,400/oz as investors flocked to safe-haven assets, though it remains to be seen if the rally will be sustained.
“Looking at past large-scale conflicts as a guide, the risk premium boost to gold prices during past Middle East and North Africa (MENA) military conflicts, while sizeable at times, ultimately proved fleeting as more certainty around the situation emerged,” noted Gregory Shearer, head of Base and Precious Metals Strategy at J.P. Morgan. “Nonetheless, in the near term, the potential for a swift lengthening to recent highs in investor gold futures positioning also points to a possible +5-10% risk premium jump in gold prices from here.”
Aluminum is another market to watch, given that the Middle East is a major producer and exporter of the base metal. In 2025, the region had a net exportable surplus of 5 million metric tons (mmt) of primary aluminum, which accounted for nearly 7% of global production. “If it looks increasingly likely that this supply gets materially dislocated or snarled, we see the potential for aluminum prices to quickly run toward $4,000/mt, adding significant upside risk to our near-term price forecasts,” Shearer added.
“In the near term, the potential for a swift lengthening to recent highs in investor gold futures positioning points to a possible +5-10% risk premium jump in gold prices from here.”
Gregory Shearer
Head of Base and Precious Metals Strategy, J.P. Morgan
What are the implications for the global economy?
Under a persistent risk premia scenario in which Brent prices remain at $80/bbl through mid-year, global GDP growth for the first half of 2026 could be depressed by an annual rate (ar) of 0.6%, according to J.P. Morgan Global Research. In addition, higher energy prices will likely feed into inflation, which could see the global Consumer Price Index (CPI) rising by more than 1%ar over the same period.
“This scenario represents a modest macroeconomic shock — one that is unlikely to pose a threat to the global expansion or materially alter the path of global monetary policy,” Lupton said.
There are also concerns that the conflict could short-circuit the rise in global business sentiment. “However, experience shows that energy price increases, even as large as 40-50%, don’t tend to materially weigh on sentiment,” Lupton added. “It would thus likely take a substantially larger price shock, or a more extensive military conflict, to activate this particular growth drag.”
Higher oil prices could pass through to inflation
Historically, higher oil prices have passed through to higher global consumer price inflation.
The situation is constantly evolving, and so is the market impact. Bookmark this page for the latest analysis from J.P. Morgan Global Research.
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